Sounds quite straightforwards to me:
1. Yes, it has nothing to do with the cash - it is so your accounts are all done in Sterling.
2. Use the exchange rate for that day to enter them into your accounts.
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Reply to: Euro Account Payments
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Previously on "Euro Account Payments"
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Euro Account Payments
Hello,
I'm currently working (luckily) in Slovakia and raising Invoices in Euro. I have a Euro Account in the UK so my payments are received in Euro.
HMRC states that Euro amounts should be converted to Sterling both on the Invoice Date and the Payment Receipt Date. Any difference in exchange rates can then be logged as gain or loss (see quote at end of post)
However, I am planning a future move to Spain and would like to keep most of the money in Euros (who knows what will happen with Sterling). I have two questions:
1. Should an exchange rate loss/gain between invoice date and payment receipt date be logged even if the money isn't actually exchanged?
2. If I pay out salary or dividend in Euros what exchange rate date should I use given that the money isn't actually being exchanged?
Thanks in advance!
Alistair
HMRC quote, from: http://www.hmrc.gov.uk/euro/faqs_indiv.htm#1d
"2. If you invoice a business customer for 200 euro, then use the spot rate for that day to convert to sterling for your accounts, and when you receive payment of 200 euro, then use the spot rate for that day to convert. Any difference in the two sterling amounts is an exchange rate loss or gain that should be reflected in your accounts."Tags: None
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